9 Tips for Investors Starting Late on Retirement Savings

December 21, 2015

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Most financial advisors agree that the best approach
to retirement planning is to start early and let your
investments grow over time. Many Americans aren't following this advice. In a
2014 national poll conducted by Bankrate, more than a quarter of survey
respondents ages 50 to 64 said they had not started saving for
retirement. Even worse, 28 percent of Americans have less than $1,000 in
savings that could be used toward retirement, according to a 2015 study by the
Employee Benefit Research Institute.

There are strategies for middle-aged Americans who find
themselves playing catch-up on their retirement savings. The most
important may be to simply start now. Here
are eight more tips to help you get on track:

Consider downsizing. Take
a hard look at your housing costs, which can be one of the largest
expenses for those in retirement. A condo or townhome can be more affordable
than the four-bedroom house where you raised the kids but is now a big empty
nest. That goes for your vehicle, too.
Switch out the gas guzzler for something smaller and more efficient.

Scale into retirement
and work longer. Consider working part time or ask your employer to
reduce your overall hours to extend the number of years you are still earning
income. With the rise of the 'gig economy,' there are many jobs that are
part time, and these can augment income. If your profession allows teaching or
consulting, it may be worth seeing a career counselor who specializes in
second-career changers, Schultz says.

Consider new ways to
build additional cash flow. If there's a real trick to retirement, it's
creating cash, Meadows says. Don't take on additional debt. We live in a
consumption-driven society with roughly two-thirds of the total gross domestic
product stemming from consumer spending. High interest rates on credit cards
aren't worth the trade-off. Think about wants versus needs.

Don't take risks and
experiment with your future. Waking up at 50 and deciding to learn to
trade options or become a day trader using your retirement savings as your testing
grounds is a fool's game, says Joshua I. Wilson, partner and chief investment
officer at Dallas-area WorthPointe Wealth Management.

Don't hold too much
money in cash. You need to invest to make your money grow. Financial
advisors recommend a mix of stocks and bonds. If you are uncertain as to what
ratio could be best for you, consider looking at target-date retirement
funds. One example, the Vanguard Target Retirement 2025 Fund (ticker: VTTVX),
is aimed at workers with about 10 years remaining until retirement age. The
asset allocation mix is about 67 percent stocks and 33 percent bonds.

Don't dial up the
risk. Now isn't the time to experiment with trading or investment
vehicles that you don't understand or that promise high returns.

If you do want to make more sophisticated investments, join
an investment club where you can get a lot of experience with very little savings
risk, Shultz says, adding: "Educate yourself, and you won't be
hoodwinked by slick salespeople."